A reverse mortgage isn’t always the best option for a senior, but there are at least 10 scenarios when taking out the federally-insured loan should be considered, says the Mortgage Professor in a recent column.
Scenarios where seniors should reject a home equity conversion mortgage (HECM) include when there are plans to pass on a debt-free house to their estate or a desire to have a spouse or child continue living in a home after the borrower passes away, writes Jack Guttentag, aka “The Mortgage Professor.”
But there are many other scenarios where a reverse mortgage could be the best strategy.
“Senior homeowners who would not endanger their goals might improve their lives by taking a HECM,” he says.
A reverse mortgage should be considered in 10 different situations for seniors:
- Whose incomes drop when they retire, but still have to make mortgage payments
- Retiring before 65 who want to delay applying for Social Security benefits
- Living on Social Security or small pensions who want to supplement their incomes
- Who have retired with a nest egg but are worried their money won’t last
- Seeking protection against a sudden drop in income, whether a spouse dies or pension is terminated
- Wanting to buy a house without the monthly payment
- Looking for an effective way to manage fluctuating incomes
- In need of resources to meet occasional expenses
- Planning to sell their homes in a few years, but need supplemental income in the meantime
- With multiple needs requiring multiple payment options
Read more at The Mortgage Professor.
Written by Alyssa Gerace